Gauging the fallout: Opinions vary on effect of Jackson’s proposed development rules

As Chuck Bennett rang up a sale at his electrical supply store in Cashiers, he showed no fear of the business slowdown some predict as fallout from a slate of development regulations coming down the pipe in Jackson County.

“Up here, people are going to spend the money to meet the ordinances,” said Bennett. “There are enough people up here that for them, money is just not an object.”

Case in point, Bennett sold a pair of wall sconces that morning that cost $1,800. Anyone with that kind of money for their dream house won’t be fazed.

But Bennett’s customer thought otherwise. He said the regulations are so tough — the toughest in the state if passed as written — they will stymie development. And he suspects that’s the whole point.

“They want to shut everybody else out. That’s all it’s about,” said James Russell of Cashiers. Russell said a drop in development will trickle down to everyone, including his own electrical jobs.

Next door at Grand Rental Station, a store that sells everything from foundation rebar to Carharts, the question was so sensitive that store clerks and customers alike wouldn’t comment on the record. They feared they could lose business from those with a different view, citing a fight that nearly broke out in the parking lot one day between customers of opposite persuasions.

Predicting the economic impact of the proposed regulations isn’t easy. Most theories start with the same premise: developers will be building fewer homes per acre and will have more upfront costs. But theories diverge from there.

If a developer has fewer lots to offer and his upfront costs are higher, one theory assumes he will charge more per lot to preserve his profit margin (see “A case study,” below).

“It is going to make lots only available to the super rich,” said Marty Jones, a realtor in Cashiers. “It will be the very special, very expensive properties that will be able to build profitably.”

But how many of these super-rich Americans seeking a mountain house in Cashiers are there? Enough to go around? If there’s not enough demand for the ultra high-end lots, developers doubting their likelihood of profit simply won’t embark on new developments.

“It would hinder anybody’s ability to develop property in Jackson County,” said Ray Trine, a Realtor and developer in Cashiers.

Not only will upfront costs be higher, but lot sales could be slower given the limited number of buyers able to afford such lots. Only those with the deepest pockets could embark on a new development.

“You can’t afford to do business here,” Jones said.

Supporters of the regulations talk about limiting the proliferation of mega-wealthy gated communities and land grabs by high-rolling out-of-state developers, but Jones argues those will be the only ones left in the game. The average developers and buyers looking for lots will pass over Jackson County for neighboring counties without such tough regulations.

There is another possibility. If there’s not enough demand out there for super-expensive lots, developers could balk at the high price of raw land — such as the $2.4 million asking price for 16 lakefront acres cited in “A Case Study.” The price of raw land could deflate, Trine said.

Some predict existing lots and homes will become hotter commodities since fewer new lots will be coming on the market.

“The existing inventory of homes should appreciate because of this,” Trine said.

All this adds up to the loss of affordable housing for locals, according to opponents of the regulations. Those on the other side scoff at that argument however.

“That’s true now,” said Bill Lyons, a Cullowhee resident and advocate of the proposed regulations. “The people of Jackson County aren’t buying these lots anyway. The overwhelming majority are sold to people out of state.”

The boom is over

There’s another premise most in the development industry in Cashiers agree on. There seems to be a glut of lots on the market these days, Trine said. So many speculators tried to strike while the iron was hot that the market is now flooded with subdivisions touting thousands of nearly identical mountain lots.

Trine and others in the development industry cite the abundance of lots sitting on the market as evidence the boom in Cashiers has already peaked.

“The existing volume of lots available in Jackson County is tremendous. The absorption rate of those lots was going to be slow anyway,” Trine said. “The boom is over.”

Slowing the rate of new lots coming on the market under the new regulations could serve as an equalizing force for the backlog, but Trine doesn’t think so. He said the regulations are like shooting a hole in an already sinking boat. Those worried that the proliferation of subdivisions would go on endlessly could have let the market correct itself, Trine said.

“There are controlling factors in the marketplace already,” Trine said.

Supporters of the regulations are fed up with the fate of the mountains being constantly boiled down to the profit margins of investors.

“These mountains aren’t a commodity for developers,” said Patty Hooper Holly, a speaker at a recent public hearing on the ordinances.

Another speaker, Kathy Calabrese, said there is a battle playing out on Jackson County’s mountaintops between greed and nature. Many cited the need to check the profit motives of a few for the best interest of all.

“Thank you for looking out for all the interests of people of Jackson County not just the developers, real estate agents and bankers,” said Vicki Greene of Webster.

Regulations for all

On a recent tour of developments in Cashiers, Trine showcased one well-done subdivision after another. It’s one positive result of the glut in existing lots.

“You have to do things better than the next guy to attract the buyer. There’s too many choices not to,” Trine said.

Once again, Trine cited the self-regulatory nature of the marketplace.

“We are selling the beautiful country we live in, and if you screw it up you can’t sell it,” Trine said.

Most homeowner’s associations also have community standards, from architecture to tree trimming.

“The value of my house is dependent on you not cutting down every tree and painting your house pink,” Trine said. “All these developments are highly regulated.”

But not all development can claim the high road, and that’s the point of the regulations, said Linda Cable, the county planner.

“We have beauty abound here and want to protect that if we can,” Cable said. “It is our responsibility. The ordinances are a major step to try to encourage responsible growth and still preserve the very reason people are coming to Jackson County.”

Lyons, a local advocate for the ordinances, asked why Trine is so concerned if he’s following all these standards anyway.

“If a developer is a good developer, why would he object to the regulations by the county?” Lyons said. “Some people can’t be trusted to do right. We must require and enforce that they do right.”

Trine agrees with Lyons on one count: some developers can’t be trusted to do right.

“I can name who those people are. There’s about half a dozen in Jackson County who everyone would like to get rid of because they do things that are horrible and ugly and are used as an example of how bad developers are,” Trine said.

But writing ordinances that punish everyone is like keeping all cars off the road because a handful of people drive drunk, Trine said. While Trine admitted there are a handful of bad developers who should be stopped, he couldn’t offer an alternative solution to the strict ordinances.

“That’s a good question,” Trine said. “I don’t know what you do.”

County Commissioner Tom Massie said that’s the conundrum county leaders are facing.

“We are all wrestling with a difficult situation,” Massie said.

But doing nothing is not an answer. Massie doesn’t see an alternative to the tough regulations.

“Regulations by definition are to regulate those who don’t comply with societal norms, whatever they may be. Consequentially this regulates the one or two or three percent of developers that don’t want any regulation whatsoever,” Massie said.

... A case study

Eddie Palmer could lose a hefty commission on a $2.4 million real estate deal if the proposed development regulations in Jackson County are passed as written.

Meanwhile, dozens of framers, roofers, electricians, painters and concrete pourers will have a few less homes on their waiting list.

Palmer, a Realtor with FOCUS Realty, has spent a year massaging a deal to develop 16 acres on the shore of Cedar Cliff Lake. Palmer assembled three adjoining property owners and convinced them to sell, and dug up a developer willing to pay their price.

The developer wanted to pack 16 lots on the 16 acres — a necessity in his view to recoup the $2.4 million asking price and other upfront costs like putting in roads and marketing the lots.

But under the new regulations, 16 lots won’t be allowed. After setting aside the required 25 percent open space and meeting the minimum lot size for the slope, the developer must scale back to 10 or 11 lots.

As a result, he would have to charge 50 percent more for each lot to still make his profit margin. Plus, the ordinance requires a hydrology report, geotechnical survey, and larger roads, further driving up the developer’s expense, and thus the cost of the lots.

The developer isn’t sure he can sell the lots for that much and might back out, Palmer said. The landowners will now have a tough time finding a buyer for their steep asking price, Palmer said.